The UK Industrial Market Tracker – Spring 2019
The industrial market continues to be the shining star of the property sector with strong rental growth boosting overall total returns for the sector, both for the sub-100,000 sq ft market which the Industrial Tracker Report focuses on, and the ‘big box’ logistics market.
2018 was yet another positive year in the occupational market with our agents reporting that, generally, demand for industrial space remained steady, giving rise to another year of stable take-up. With this sustained demand, supply has continued to fall across many regions or remained stable from its already low base.
Strong confidence in the occupational market saw a pick-up in industrial speculative development over the course of 2018. We recorded at the start of 2019 that there was over 12 million sq ft of industrial and logistics floorspace speculatively under construction nationally.
Unfortunately for the market of industrial stock under 100,000 sq ft, most of this space under construction was ‘big box’ logistics space. The continued low levels of speculative development of smaller industrial units will put further pressure on already stressed supply levels. We believe that it is this that will drive further rental growth in the market.
Andy Harding, lead director industrial and logistics commented: “With strong occupier demand and modest supply, the industrial market had another solid year in 2018. From an investment perspective, the industrial sector has proven again to be the standout performer amongst main commercial property types, outperforming both retail and offices, and we expect this to continue due to the sound fundamentals.
Despite a backdrop of political and economic uncertainty from Brexit, cities continue to grow and as does the need to service them. Our predictions suggest that strong demand and supply fundamentals will drive another robust year.”
Jon Sleeman, director industrial and logistics research elaborated: “Our research highlights robust performance across 2018, with demand comparable to 2017 and even increases across the North West, East Midlands and West Midlands. Nationally, our rental growth data showed an unweighted average growth across the country of 8.0% in 2018, and strong overall total return from the UK industrial market at 15.5%, significantly outperforming other traditional sectors. Looking to the rest of 2019, both JLL and independent data suggests that sentiment for the industrial and logistics market will remain strong, positioning the sector as a favoured option amongst investors and developers.”
To find out more about our sentiments concerning the future performance of the small and mid-box industrial sectors, complete the form below download our Industrial Market Tracker Report 2019.